This motion to remand a pending appeal requires renewed consideration of the issue whether the new uniform federal limitations period for securities fraud claims applies retroactively. The issue arises on a motion by Julian Henley to remand to the District Court his appeal from the September 30, 1991, judgment of the District Court for the District of Connecticut (T.F. Gilroy Daly) dismissing as time-barred his suit under section 10(b) of the Securities Exchange Act of 1934 ("the '34 Act"), 15 U.S.C. § 78j(b) (1988). See Henley v. Slone, 774 F.Supp. 98 (D.Conn.1991). We grant the motion to remand.

2

We first encountered the retroactivity issue in Ceres Partners v. GEL Associates, 918 F.2d 349 (2d Cir.1990), in which we announced a uniform limitations period of the earlier of one year from the date the fraud was or reasonably should have been discovered or three years from the date of the transaction. In adopting the new one-year/three-year period, we explicitly left open the retroactivity issue, which did not affect the outcome of that appeal. Id. at 364. We faced the issue again in Welch v. Cadre Capital, 923 F.2d 989 (2d Cir.1991) ("Welch I "), vacated and remanded sub nom. Northwest Savings Bank v. Welch, --- U.S. ----, 111 S.Ct. 2882, 115 L.Ed.2d 1048 (1991), ruling that the new limitations period did not apply retroactively to bar the Welch complaint. See also Levine v. NL Industries, Inc., 926 F.2d 199, 201-02 & n. 1 (2d Cir.1991).

The next move was made by Congress. On December 19, 1991, Congress amended the '34 Act by enacting section 27A to modify the retroactive effect of the Lampf ruling. See Federal Deposit Insurance Corporation Improvement Act of 1991, § 476, Pub.L. 102-242, 1991 U.S.C.C.A.N. (105 Stat.) 2236. This provision provides for reinstatement of certain actions dismissed under Lampf, provided the action was commenced prior to June 19, 1991, the date of the Lampf decision, and had been timely filed according to the statute of limitations applicable on June 19, 1991.

5

In the pending case, the appellees resist the motion to remand for application of the benefit of section 27A, contending that section 27A does not help Henley because his suit was not timely filed under the law in effect on June 19, 1991. Appellees point out that prior to June 19, this Court had anticipated Lampf by adopting the one-year/three-year limitations period in Ceres Partners. However, on June 19, it was also the law of this Circuit that Ceres Partners was not to be applied retroactively as a routine matter. See "Welch I " (decided Jan. 22, 1991).

6

Recognizing that Welch I stated the law of this Circuit as of June 19, 1991, appellees further contend that Henley's suit is untimely even under that decision because the considerations that militated against retroactive application of Ceres Partners in Welch I do not apply to Henley's circumstances. Henley responds that by enacting section 27A Congress intended to restore to claimants suing under the '34 Act the benefit of any pertinent state limitations period that existed prior to Lampf. Before this Circuit in Ceres Partners and the Supreme Court in Lampf announced the one-year/three-year limitations period, the applicable limitations period for securities fraud claims in Connecticut was two years after the contract of sale, see Clute v. Davenport, 584 F.Supp. 1562, 1577 (D.Conn.1984), and Henley alleges that his suit is timely under that standard. These conflicting contentions require us to confront a subtle issue lurking beneath the surface clarity of section 27A. The issue is whether Congress intended to afford pre-Lampf litigants the benefit of more generous state or federal common law limitations periods or to afford them only whatever benefit they can derive from the law existing in the pertinent jurisdiction on June 19, 1991, including the law concerning both a new limitations period and the retroactivity of such a new limitations period.

Section 27A(a) provides:

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The limitation period for any private civil action implied under section 10(b) of this Act [the '34 Act] that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.

8

Pub.L. 102-242, 1991 U.S.C.C.A.N. (105 Stat.) 2236, 2387 (1991) (emphasis added). On its face, this language appears to support appellees' contention that Henley's suit is to be governed, not by automatic application of the state limitations period that preceded Ceres Partners, but by a case-specific determination of whether the retroactivity principles applied in Welch I make it inappropriate to apply the new limitations period.

9

We acknowledge that some supporters of section 27A might be surprised to learn that it does not routinely afford all '34 Act claimants the benefit of whatever state limitations period predated Lampf. For example, in urging adoption of section 27A, Congressman Edward J. Markey contended that the provision "permits the reinstatement of any suit which may have been dismissed post-Lampf as a result of the Lampf decision." 137 Cong.Rec. H11,761, H11,813 (Nov. 26, 1991) (emphasis added). Moreover, the only specific explanation we have located of the reference to retroactivity in section 27A indicates that the proponents of the amendment expected the retroactivity clause always to benefit '34 Act claimants. Explaining the amendment to the Senate, Senator Richard H. Bryan pointed out that some federal courts had anticipated Lampf but had declined to apply the new limitations period retroactively "because of the obvious unfairness of doing so." 137 Cong.Rec. S18,617, S18,624 (Nov. 27, 1991). He then added:

10

In those circuits that had declined to apply the shortened statute retroactively, the courts would continue to be obliged to decline to apply the new rule. That is the meaning of the phrase "including principle[s] of retroactivity."

11

Id. Obviously, Senator Bryan thought the retroactivity phrase could only be helpful to '34 Act claimants.

12

Despite the expectation of some supporters of section 27A that it would routinely apply a more generous state or federal common law limitations period to all suits pending on June 19, 1991, we see no escape from the clear statutory language requiring the application of "the laws applicable in the jurisdiction, including principles of retroactivity." In Connecticut, where Henley's suit was filed, that means the one-year/three-year rule of Ceres Partners applied sparingly in light of the retroactivity principles enunciated in Welch I; if it would be inequitable under Welch I to apply Ceres Partners to Henley's suit, then the more generous limitations period of prior state law applies.

13

On this understanding of section 27A, we grant the motion to remand so that the District Court may consider (a) the timeliness of Henley's suit under Ceres Partners to whatever limited extent that decision may properly be applied retroactively under Welch I, and (b) if the Court determines that Ceres Partners is not to be applied retroactively to Henley's suit, the timeliness of that suit under prior state law.

14

Appellees also contend that section 27A is an unconstitutional exercise of authority by Congress, barred on separation of powers grounds as an attempt to alter the outcome of cases already adjudicated. We prefer not to anticipate this constitutional issue unless and until it has been determined that Henley's suit is timely by virtue of section 27A. If, on remand, the District Court determines that the suit is timely, the Court should then consider whatever constitutional challenges to section 27A appellees choose to present.

15

The judgment of the District Court is vacated, and the case is remanded for proceedings consistent with this opinion.